With their first round open today there's a new player on the block when it comes to equity crowdfunding in Finland, joining the ranks of Invesdor and Fundedbyme. But this one is different - Innovestor pulls from the banking roots of its founders, and is bringing something different to the table.
To get a picture of where Innovestor is coming from, you have to look into the founders. Chairman of the Board Antti Parviainen has essentially done his entire career at Nordea, where he was Head of Investment Products. But meanwhile he's kept his eyes on the changes in the industry by being a member of the Financial Innovation Standing Committee by the European Securities Market Authority. His co-founder, CEO Tommi Äijälä also spent some time at Nordea, later moving to be CEO of the Finlandia Group, a mid-sized asset management firm.
From this background, Parviainen explains that they're trying to build a crowdfunding platform up to private equity standards.
What sets Innovestor apart from its competitors, according to Parviainen, is four factors. First, Innovestor works heavily on the screening of the companies that come onto their platform, getting each company approved by their board of directors and screening the concept by experts in cleantech, mobile, and other sectors. The platform can be very selective because they plan to only run one crowdfunding round at a time to focus maximum attention.
Secondly, the platform is policing the valuations of their crowdfunded companies. One problem that has somewhat plagued other platforms in the region is going along with the ridiculous valuations companies have given themselves, like couple million euro valuations for products still in the concept stage. Working with the company on a reasonable valuation is a no-brainer.
Thirdly, Innovestor is going to play a larger due diligence role in these startups by doing some investigation into the founders, patents, and other variables to make sure everything is as it's advertised. Additionally the platform is investing into the presentation of these companies by producing videos on company, its key shareholders, and other content.
And finally, the platform is using standardized shareholder agreements to keep it simple to invest and keep investing into companies on Innovestor's platform.
With this unique structure it makes more sense that they're not targeting the average tech-friendly 30-something with a little risk-friendly investment money. Instead they're looking at a minimum €20-50,000 investment range, targeting wealthier investors, foundations, and corporate institutions. When asked, Innovestor says they're not going to be a call-center style "crowdfunding" platform, hitting up a list of leads every month. What's more important to them is to build a good brand for their platform rather than marketing individual share issues (which they claim also makes they exempt from the recent FIN-FSA rule change on crowdfunding platforms).
The round size they're targeting are in the €500,000 to €5 million range, where they see a gap.
With all this extra work done only for a single company at a time, it's interesting to note that Innovestor is taking a smaller cut than the 10-15% success fee we've seen as the regional average. Instead, Innovestor only takes a 5% cut from the company's raised cash, and will further own 2% of the company in equity.
The first round up on their platform, launching today, is a Finnish innovation in the transportation of Liquid Natural Gas. Here, by means of the new thermal insulation innovation, it is possible to produce containers that are cheaper, lighter, and possess higher LNG capacity compared to other provider. More information can be found by logging into Innovestor, likely after tonight's grand opening event.
We've been following equity crowdfunding closely in the region, and Innovestor's approach feels like a mix of crowdfunding and an easily accessible angel group. Will their one-company-at-a-time strategy work out for them? We'll be following them to find out.